Carbon Tax Act comes into effect 01.06.2019

Excerpt from a media statement from National Treasury on the publication of the 2019 Carbon Tax Act:

"The Carbon Tax Act gives effect to the polluter-pays-principle for large emitters and helps toensure that firms and consumers take the negativeadversecosts(externalities)into accountin their future production, consumption and investment decisions. Firms are incentivizedtowardsadoptingcleaner technologies over the next decade and beyond.

The carbon tax will initially only apply to scope 1 emitters in the firstphase.The first phase willbe from 1 June 2019 to 31 December 2022, and the second phase from 2023 to 2030.

The design of the carbon taxalsoprovides significant tax-free emission allowances rangingfrom 60 per cent to 95 per centin thisfirst phase.This includes a basic tax-free allowance of60 per cent for all activities, a 10 per cent process and fugitive emissions allowance, amaximum 10 per cent allowance for companies that use carbon offsets to reduce their taxliability, a performance allowanceof up to 5 per cent for companies that reduce the emissionsintensity of their activities, a 5 per cent carbon budget allowance for complying with thereporting requirementsand a maximum 10 per cent allowance for trade exposed sectors.

The introduction of the carbon taxwill also nothave anyimpact on the price of electricity forthe first phase.This will result in a relatively modest carbon tax rate ranging from R6 to R48per tonneof CO2equivalent emitted, which is a relatively low tax rate to further providecurrentsignificant emitterstimeto transition theiroperations to cleaner technologies throughinvestments in energy efficiency, renewables and other low carbon measures"